Mitch Wainer, CMO of DigitalOcean, talks about growth strategy, startup funding, and cloud

by Saad Khan  July 9, 2015

The biggest challenge marketers face today is in determining which channel best suits their business goals. It is more prevalent today than ever before to optimize and measure the performance of creative campaigns, specially when we talk in terms of Digital, as today there is a niche focus on the data-driven campaigns. There are a growing number of technology based solutions that help marketers understand the data driven insights.

To act upon these insights, you need Digital Marketing Engineers, people who have an understanding of their customers across all channels, and understand that the brand interaction has now grown to be digital along with the traditional physical interaction.

When we talk about modern day Digital Marketing Engineers, the first name that comes to our mind is of Mitch Wainer, CMO of DigitalOcean.

From the giveaway of $50 promo to everyone in attendance at the New York Tech Meetup to taking DigitalOcean to be the fastest growing cloud hosting service provider, he has played an anchor role in sailing the ship using the tactics of integrated marketing.

Mitch has over 15 years of experience in digital marketing and has helped build and develop websites optimized for high growth. Mitch has been interviewed by several of the top tech publications, and recently he took out time to answer questions for our Cloudways community! So without any further delays, here is Mitch Wainer, CMO of DigitalOcean.

Mitch Wainer interview

Cloudways: Why did Ben Uretsky and Moisey Uretsky decide to move on from a multi-million dollar managed hosting business to found DigitalOcean? Is scaling a product based business easier in comparison to a service based business?

Mitch Wainer: To answer the second question – 100% yes. It’s much easier to scale a product based business than a service-based business. That was the main reason they shifted their focus to DigitalOcean. In order for the large customers on ServerStack to create their infrastructure environment, someone needed to manually install the needed servers at the datacenter – so provisioning time was manual. Moreover, once the account was setup they needed to worry about the server configuration; because ServerStack is a managed service, they take care of not only the infrastructure layer but the full tech stack. And even before setting up the account, there is a long sales process to explain to big enterprise customers why ServerStack was the right solution to their problems vs key competitors. DigitalOcean is capturing the hearts and minds of developers because of its simplicity and on-demand service, it allows for a much quicker adoption rate and is a much more scalable business model.

Cloudways: What made you go into Techstars when you guys have a prior experience of a successfully managed hosting service? What have you learned there?

Mitch Wainer: One of the best things about TechStars is the people. You’ll meet incredible entrepreneurs, VCs and angel investors, and inherit an awesome mentor network (shoutout to Jason Seats who was invaluable to DigitalOcean). Also, because it’s an accelerator that means for the entire 3 month duration of the program you’re laser-focused on building your company. We had a daily routine where the founding team woke up and worked out to P90X, grabbed breakfast on the way to Techstars, then worked from 10AM until midnight. We’d get back to our room and watch a few episodes of Entourage, go to sleep, then repeat the cycle the next morning. So we had this cadence where it’s just constant communication and working through problems, and at the end of it all we had all of these amazing connections and grew our customer base from 50 to 400 active users. It put us in a position to succeed and set us up for our first round of funding.

Cloudways: According to The New Yorker, each year, 3,000+ startups approach Andreessen Horowitz and only 15 of them get funding. How did you guys persuade them? Any pointers for a successful VC pitch?

Mitch Wainer: At the end of the day you’re telling a story when you pitch VCs. Of course you have to have the growth numbers, but you also have to have a clear vision for the future. It’s one thing to build an amazing product, it’s a completely different thing to sell it. For us, having the growth story attached to our mission set us up for success when we started to pitch investors. The future of the developer community is so exciting because it’s almost limitless when you think about their potential. If you look at the Fortune 500 today, a large majority are not tech companies; but you’ll see a transition in the next decade where 90% of the Fortune are tech companies. And if you think about the decision makers at these businesses that specialize in technology, it’s software engineers, it’s developers. That’s our market. So if we can capture the hearts and minds of developers today, that’s going to set us up for an incredible future as we continue to scale and mature our platform and power the next generation of startups. And it was the investors that believed that developers are the future that ended up wanting to invest in our company – Andreessen Horowitz was one of those investors.

Cloudways: DigitalOcean is one of the finest examples of hyper-growth. How do you quantify growth and how would you define sustainable growth?

Mitch Wainer: A high-growth business is typically growing over 100% year-over-year. To put it as straightforwardly as possible: if you’re a SaaS business, you have a high customer retention (95%+), and your upsell retention is high (125%+), then you’ll be in a position to enjoy sustainable growth. These are the SaaS metrics you want to pay attention to. So the question is not if we’re going to grow next month, but how much are we’re going to grow next month. 

Cloudways: How do you define the word “team” at DigitalOcean and how is a great team proportional to greater growth rate?

Mitch Wainer: It’s always been a team effort since day one for DigitalOcean. Everyone has contributed their special talent into the formula to make it magical. A great team drives innovation, execution, and communication in order to reach ambitious goals. It’s about hiring the best people in the industry to form a high-performing team, that is trusting of each other, allowing for collaboration and creativity, and that ultimately executes on their initiatives. We’ve always been looking for the best of the best and hiring remains a top priority.

Cloudways: I watched a video of your presentation at the Techstars event. You mentioned that your company’s 60% growth comes via word of mouth. Is there really a way to measure word of mouth?

Mitch Wainer: There are a few ways you can quantify word-of-mouth through your acquisition model. For us we look at organic-direct, which means anyone who types in “DigitalOcean” on Google or types in our URL in their browser and lands on our homepage. It’s also anyone that refers us in a third party forum and someone else clicks through to our website. Typically, if you’re running a high-growth business, organic-direct is going to be your biggest channel.

Cloudways: You always mentioned that content marketing is a big part of your marketing strategy. And you scaled it by outsourcing content to community. What was the thought behind doing that? How you measure the ROI of the $200 investment for a tutorial?

Mitch Wainer: We found out early on that community content generated new signups and brand awareness. Today, we receive over 3 million unique visitors per month through our community platform and our tutorials are driving a large majority of that traffic. We take a lot of pride in the quality of our content and we have a very talented in-house team of technical writers. We also have an editorial team to manage in-bound submissions and work closely with outsourced authors. In terms of ROI, without diving into the economics, it does provide a healthy return for the business.

Cloudways: Usually SaaS business models use freemium strategy for acquisition. But you guys do a lot of advertising using promo codes ($10 credit). Why not freemium model? Did it help in limiting abuse/churn?

Mitch Wainer: Being that we are an infrastructure provider, it’s easy for someone to come onto our platform and abuse our system. We call them “noisy neighbors” because they can affect other users on the same machine, creating a poor end-user experience. So what we do is offer a promotional credit that provides users with a credit that provides two months free on our smallest plan. That’s essentially a free trial on DigitalOcean, but in return the user needs to input their credit card information, and that’s how we protect our customers.

Cloudways: How did you get on TechCrunch at first? And what’s the story about 100 push-ups? Do you guys do PR yourself or through a PR agency?

Mitch Wainer: We currently use a PR Agency called Method Communications and have a PR Coordinator in-house. Going back to that TechCrunch appearance, which was our first time ever talking to them, we were at NY Tech Day, a popular NYC startup conference, and our CEO Ben spotted TechCrunch TV walking around. Rewinding to earlier that week, I bet a few people in the office that I could do more push-ups than their combined total (and won that bet). So when Ben saw them, he told asked them if they would shoot an interview with DigitalOcean in exchange for 100 push-ups, and they ultimately agreed.

Cloudways: What are some marketing initiatives and strategies that did NOT work out for DigitalOcean?

Mitch Wainer: I learned very early on that advertising to developers is extremely challenging. They’re a highly intelligent customer base and can smell a marketing ploy a mile away. So instead of blasting them with ads. I had to think creatively and build an organic and content driven growth engine that leverages the product, creates a community, and really drives word-of-mouth awareness.

Cloudways: How do you see the evolving PaaS market? What do you think is the key challenge for companies like Cloudways?

Mitch Wainer: I believe the main challenge for PaaS companies is similar to what DigitalOcean is dealing with as an IaaS provider: how do you appeal to developers and make the user-experience seamless and simple for them? That means putting a lot of time into the design of your product, and really understanding what your users need from your platform.

We hope that DigitalOcean can be the infrastructure layer for these PaaS companies as they continue to come online, but there’s still more work that PaaS companies need to do to make their platform attractive to developers.

Cloudways: Which barriers impede Cloud adoption as compared to traditional type hosting?

Mitch Wainer: Cloud servers are a bit more complex v.s. a shared hosting environment on dollar-rate hosting. You’re going to find yourself with a different type of users if you compare the two platforms; anyone can signup on cheap hosts and create a website on their shared hosting plan. But if you’re building a distributed application, having a cloud infrastructure environment allows you much more flexibility and scalability.

Cloudways: What does the rising trend of containerization mean for VM-based platforms?

Mitch Wainer: The rise of containerization is re-defining orchestration and the future of architecting large-scale server environments, specifically to run distributed applications. And it works extremely well on VMs. DigitalOcean offers a Docker image and it’s the third most popular out of all of the ones we offer today. It’s quickly picking up adoption within the enterprise landscape, as big technology companies are beginning to re-think how they architect their server environments. Teams using Docker, for example, are able to avoid the headaches of inconsistent setups, especially when you’re dealing with a clusters of servers. These are the types of technologies that will define the future of web infrastructure.

Cloudways: What is DigitalOcean’s position in the containers wars between Docker and CoreOS/rocket (with Google behind?)

Mitch Wainer: We don’t have a position. From our perspective, Docker and CoreOs are focused on the B2B enterprise market. We think both technologies are awesome.

Cloudways: Do you think that the container ecosystem is mature enough to build services around it with adequate assurance?

Mitch Wainer: Yes. It’s worth noting that these technologies are very new, so there’s a learning curve that may be deterring potential customers. But just look at the large companies leveraging container technologies – they wouldn’t be leveraging containerization it if they weren’t fully confident.

Cloudways: Last, where do you see DigitalOcean in next 5 years? Are you guys planning acquisitions, IPO etc to scale the company?

Mitch Wainer: DigitalOcean is laser-focused on building the best infrastructure experience possible for developers. That’s all we’re thinking about and we’re so excited to be on this mission.

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About Saad Khan

Muhammad Saad Khan is Growth Hacker & Content Marketing Strategist at Cloudways. He is a columnist at VentureBeat and a full stack marketing advocate. He works on business growth, influencer engagements, and innovative content strategies.

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